Robert Garrison

The frenzy around blockchain has been unprecedented, but is it a disruptive force on the verge of replacing legacy infrastructures, or will its effect be only marginal? Robert Garrison, DTCC’s chief information officer, explains

Distributed ledger technology (DLT) has generated an unprecedented degree of excitement and interest in financial services in a very short amount of time. Can the technology really live up to the hype?

Maybe, that is what we are going to find out. The entire industry, as well as people outside of it, is looking into the application of DLT at the moment, trying to assess the use cases of the technology, not only for financial services, but for all industries.

We’re going to learn a lot over the course of the next few years. One of the things we need to be concerned about, however, is the way in which DLT will be a continuation of what the industry has built over the course of the last 40 years, which has been a really stable, efficient processing platform—even if not quite as optimised as it could be. It runs every day with consistent efficiency, which is what we need to maintain going forward as we try to build bridges and leverage the potential of DLT.

Most people outside the industry make various claims about how disruptive this technology can be. Those arguing for an overwhelming change are likely unaware of, or do not fully grasp, the inner workings and the challenges the industry has faced over the course of the past 40 years, or the regulatory environment we operate in to make sure the assets, the clients and the investments are safe and secure and, most importantly, are being processed every day.

I think we’ll get there eventually but we have to keep in mind the complexities of the industry. These complexities need to be fully understood before we can appreciate how some DLT opportunities can be realised.

The potential of DLT to disrupt financial services is often equated with Airbnb and Uber and the disruptive effect they had on their respective industries. Do you think DLT can really do that to financial services?

My guess is that we’re going to find this out more quickly than expected. We have already developed a lot of use cases for DLT. We did an exercise where we came up with over 25 use cases for DLT that we thought the industry could benefit from, and we’re moving forward with a couple of those. DTCC works with the industry to progress some of these use cases and to help realise the opportunities they will create. I think we’ll learn sooner rather than later about just how disruptive this technology will be.

What is DTCC doing to advance discussions and experiments on DLT solutions?

We’ve formed an Office of Blockchain Technologies Strategies and Research, which is a group made of both technologists and business people. We issued a whitepaper on blockchain in January this year and in March we held a blockchain symposium, which was attend by a lot of established industry experts and speakers. Most recently, we announced that we’re working on a pilot project, testing blockchain for credit derivatives with a number of banks and other financial firms. We are also working on a blockchain solution for repo transactions with Digital Asset Holdings. We have made a small investment in the firm and we sit on its board.

One thing that really helped us internally was the creation of a technology lab, which we use to experiment with the various aspects of the technology, and which enables us to learn every day about how that technology works. We have also joined the Linux Foundation and we are participating in its Hyperledger project, a cross-industry collaborative effort to build and sustain an open distributed ledger platform that can be used more broadly by not only our industry, but other industries, too.

The latest interviews from Asset Servicing Times
Drew Nicol and BNY Mellon’s James Slater discuss the results of a joint research study with PwC exploring buy-side opinions on central counterparties, incoming collateral rules and the rise of peer-to-peer lending
Real Estate Investment Times

Visit our sister site
for all the latest real estate investment news
View interviews section
The latest features from Asset Servicing Times
Brexit has meant some difficult decisions for UK-based financial services firms. Stephanie Palmer-Derrien asks whether Ireland could be the answer
Mark Baker of SimCorp assesses the results of two recent surveys to gauge what matters most when optimising collateral and controlling liquidity
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Jay Patani of software company ITRS looks at how financial institutions of all shapes and sizes can reduce reputational risk in their trading systems
As the FCA consults on the potential expansion of its Senior Management and Certification Regime, Stephanie Palmer gauges the initial reactions
In a climate of regulatory change, cost pressures and cyber threats, the network management industry will be at its strongest if it sticks together. Stephanie Palmer reports from The Network Forum in Warsaw
Regulation and technology were still the hottest topics in town at Fund Forum International in Berlin. Stephanie Palmer reports
As the active-passive fund debate reaches fever pitch, there is a third option, says Broadridge’s Stephanie Clarke
Asset managers are increasingly relying on data, and the service providers that can manage it, heard attendees at London’s TSAM conference
View features section
Country profiles
The latest country profiles from Asset Servicing Times
The Asian market may be improving on the harmonisation front, but the situation is still far from ideal. Experts discuss what there is still left to do
Brazil is hogging the limelight from its South American neighbours. But, although reforms are in full swing, there is still work to be done
Securities Lending Times

Visit our sister site
for all the latest securities lending news and analysis
No nation is an island, and the Polish CSD has post-trade services to cater to all of Central and Eastern Europe, says KDPW’s Iwona Sroka
In a region as geographically, culturally and economically diverse as Asia, funds passports have a tricky road ahead if they’re to redefine the industry
Amid cross-border restrictions and tightened belts, Luxembourg’s kingdom of real estate investment won’t be crumbling any time soon
The Chinese market has taken a knock to its confidence, but despite its size, it is still merely an emerging market, and must take these setbacks in its stride
Rich in sunshine, cork hats and tired clichés, Australia’s funds industry doesn’t buck the trend, boasting record levels of assets under custody
As the Saudi Arabian stock exchange finally opens its doors to foreign investments, the influx from abroad will be in baby steps, not leaps and bounds
View country profiles section